Declares Special Cash Dividend
Raises Fiscal Year 2023 Outlook on Key
Metrics
SharkNinja, Inc. (“SharkNinja” or the “Company”) (NYSE: SN), a
global product design and technology company, today announced its
financial results for the third quarter ended September 30,
2023.
Highlights for the Third Quarter 2023 as compared to the
Third Quarter 2022
- Net sales increased 13.1% to $1,070.6 million and Adjusted Net
Sales increased 14.6% to $1,057.4 million.
- Gross margin and Adjusted Gross Margin increased 920 and 950
basis points, respectively.
- Net income decreased 76.7% to $18.7 million. Adjusted Net
Income increased 34.0% to $133.0 million
- Adjusted EBITDA increased 38.4% to $208.7 million, or 19.7% of
Adjusted Net Sales.
Mark Barrocas, Chief Executive Officer, commented, “I’m thrilled
with our strong performance in the third quarter. This is a result
of a lot of hard work by our teams across the globe. We continue to
deliver on our three-pillar growth strategy of gaining market share
in existing categories, entering new and adjacent categories and
international expansion. We are leveraging our disruptive
innovation engine, our highly effective go-to-market strategy, and
our efficient supply chain as we strive to deliver industry-leading
growth and profitability.”
“We have good momentum as we head into the holiday season. As we
look into our future, I'm excited about the tremendous whitespace
in front of us. I am confident we’re on the right track to fulfill
our mission of positively impacting people’s lives every day in
every home around the world and to deliver substantial value to all
our stakeholders.”
Three Months Ended September 30, 2023
Net sales increased 13.1% to $1,070.6 million, compared to
$946.9 million during the same period last year. Adjusted Net Sales
increased 14.6% to $1,057.4 million, compared to $922.9 million
during the same period last year, or 12.8% on a constant currency
basis. The increase in net sales and Adjusted Net Sales resulted
primarily from growth in the cooking and beverage appliances, food
preparation appliances and other net sales product categories,
partially offset by a decline in the cleaning appliances product
category.
- Cleaning Appliances net sales decreased by $54.1 million, or
10.7%, to $449.3 million, compared to $503.4 million in the prior
year quarter. Adjusted Net Sales of Cleaning Appliances decreased
by $43.6 million, or 9.0%, from $486.1 million to $442.5 million,
driven by softness in the North America market for corded and
cordless vacuums. This net sales decline was partially offset by
growth in the carpet extraction sub-category driven by new product
innovation.
- Cooking and Beverage Appliances net sales increased by $78.9
million, or 30.3%, to $339.3 million, compared to $260.4 million in
the prior year quarter. Adjusted Net Sales of Cooking and Beverage
Appliances increased by $80.0 million, or 31.0%, from $258.2
million to $338.1 million, driven by growth in Europe, specifically
in the United Kingdom, where we strengthened our leading market
position. Our global growth was also supported by the full quarter
of sales of our outdoor grill that launched in the second half of
2022, which continues to perform well across the US and European
markets.
- Food Preparation Appliances net sales increased by $50.2
million, or 31.1%, to $211.5 million, compared to $161.3 million in
the prior year quarter. Adjusted Net Sales of Food Preparation
Appliances increased by $52.5 million, or 33.5%, from $156.8
million to $209.3 million, driven by strong sales of our ice cream
makers and compact blenders, led by the launch of our new portable
blenders.
- Other net sales increased by $48.7 million, or 223.2%, to $70.5
million, compared to $21.8 million in the prior year quarter.
Adjusted Net Sales in the other category increased by $45.7
million, or 209.3%, from $21.8 million to $67.5 million, primarily
driven by continued strength of haircare products within the beauty
category.
Gross profit increased 41.9% to $487.5 million, or 45.5% of net
sales, compared to $343.5 million, or 36.3% of net sales, in the
third quarter of 2022. Adjusted Gross Profit increased 43.1% to
$505.5 million, or 47.8% of Adjusted Net Sales, compared to $353.2
million, or 38.3% of Adjusted Net Sales in the third quarter of
2022. The increase in gross margin and Adjusted Gross Margin of 920
and 950 basis points, respectively, was primarily driven by
continued supply chain tailwinds, cost optimization efforts and a
favorable pricing and promotional mix.
Research and development expenses increased 12.5% to $60.7
million, or 5.7% of net sales, compared to $54.0 million, or 5.7%
of net sales, in the prior year quarter. This increase was
primarily driven by incremental personnel-related expenses of $7.1
million driven by increased headcount to support new product
categories and new market expansion, as well as a $2.9 million
increase in share-based compensation.
Sales and marketing expenses increased 55.9% to $207.6 million,
or 19.4% of net sales, compared to $133.1 million, or 14.1% of net
sales, in the third quarter of 2022. This increase was primarily
attributable to increases of $38.2 million in advertising-related
expenses and $9.6 million in personnel-related expenses to support
new product launches and expansion into new markets, which includes
an incremental $1.8 million of share-based compensation, and an
increase of $14.0 million in delivery and distribution costs driven
by higher volumes, particularly in our direct-to-consumer ("DTC")
business.
General and administrative expenses increased 163.5% to $124.7
million, or 11.6% of net sales, compared to $47.3 million, or 5.0%
of net sales in the prior year quarter. Included in general and
administrative expenses in the third quarter of 2023 is $41.5
million of costs related to the separation and distribution from JS
Global, as well as incremental personnel-related expenses of $21.9
million, of which $15.7 million is attributable to increased
share-based compensation.
Operating income decreased 13.3% to $94.5 million, or 8.8% of
net sales, compared to $109.1 million, or 11.5% of net sales,
during the prior year quarter. Adjusted Operating Income increased
44.1% to $190.1 million, or 18.0% of Adjusted Net Sales, compared
to $131.9 million, or 14.3% of Adjusted Net Sales, in the third
quarter of 2022.
Net income decreased 76.7% to $18.7 million, or 1.7% of net
sales, compared to $80.3 million, or 8.5% of net sales, in the
prior year quarter. Net income per diluted share decreased 76.8% to
$0.13, compared to $0.58 in the prior year quarter.
Adjusted Net Income increased 34.0% to $133.0 million, or 12.6%
of Adjusted Net Sales, compared to $99.2 million, or 10.8% of
Adjusted Net Sales, in the prior year quarter. Adjusted Net Income
per diluted share increased 33.6% to $0.95, compared to $0.71 in
the prior year quarter.
Adjusted EBITDA increased 38.4% to $208.7 million, or 19.7% of
Adjusted Net Sales, compared to $150.8 million, or 16.3% of
Adjusted Net Sales in the prior year quarter.
Nine Months Ended September 30, 2023
Net sales increased 13.5% to $2,876.2 million, compared to
$2,534.7 million during the same period last year. Adjusted Net
Sales increased 13.4% to $2,798.7 million, compared to $2,468.8
million during the same period last year, or 13.7% on a constant
currency-basis. The increase in net sales resulted primarily from
growth in the cooking and beverage appliances, food preparation
appliances and other net sales product categories, partially offset
by a decline in the cleaning appliances product category.
- Cleaning Appliances net sales decreased by $73.6 million, or
5.4%, to $1,278.0 million, compared to $1,351.6 million during the
same period last year. Adjusted Net Sales of Cleaning Appliances
decreased by $72.7 million, or 5.6%, from $1,301.3 million to
$1,228.6 million driven by softness in the North America market for
corded and cordless vacuums. This net sales decline was partially
offset by growth in the carpet extraction sub-category driven by
new product innovation.
- Cooking and Beverage Appliances net sales increased by $242.5
million, or 34.8%, to $939.1 million, compared to $696.6 million
during the same period last year. Adjusted Net Sales of Cooking and
Beverage Appliances increased by $242.2 million, or 35.1%%, from
$690.7 million to $932.9 million driven by growth in Europe,
specifically in the United Kingdom with air fryers, where we
strengthened our leading market position. Our global growth was
further supported by the full nine months of sales of our outdoor
grill that launched in the second half of 2022, which continues to
perform well across the US and European markets.
- Food Preparation Appliances net sales increased by $45.3
million, or 10.6%, to $472.7 million, compared to $427.4 million
during the same period last year. Adjusted Net Sales of Food
Preparation Appliances increased by $46.6 million, or 11.2%, from
$417.7 million to $464.4 million driven by strong sales of our ice
cream makers and blenders.
- Other net sales increased by $127.3 million, or 215.2%, to
$186.5 million, compared to $59.2 million during the same period
last year. Adjusted Net Sales in the other category increased by
$113.6 million, or 192.1%, from $59.2 million to $172.8 million
driven by continued strength of haircare products within the beauty
category.
Gross profit increased 30.2% to $1,285.0 million, or 44.7% of
net sales, compared to $986.9 million, or 38.9% of net sales, in
the same period last year. Adjusted Gross Profit increased 28.8% to
$1,305.9 million, or 46.7% of Adjusted Net Sales, compared to
$1,013.6 million, or 41.1% of Adjusted Net Sales. The increase in
gross margin and Adjusted Gross Margin of 580 and 560 basis points,
respectively, was primarily driven by continued supply chain
tailwinds, cost optimization efforts and a favorable pricing and
promotional mix. We also drove strong sales through our higher
margin DTC channel, specifically in the beauty category.
Research and development expenses increased 12.8% to $180.4
million, or 6.3% of net sales, compared to $160.0 million, or 6.3%
of net sales during the same period last year. This increase was
primarily attributable to an increase of $15.4 million in
personnel-related expenses driven by increased headcount to support
new product categories and new market expansion, as well as a $2.6
million increase in share-based compensation.
Sales and marketing expenses increased 40.1% to $568.0 million,
or 19.7% of net sales, compared to $405.3 million, or 16.0% of net
sales during the same period last year. This increase was primarily
attributable to increases of $75.2 million in advertising-related
expenses and $22.7 million in personnel-related expenses to support
new product launches and expansion into new markets, which includes
an incremental $2.0 million of share-based compensation, and an
increase of $35.2 million in delivery and distribution costs driven
by higher volumes, particularly in our DTC business. The remaining
increase in sales and marketing was driven by an increase in public
relations expenses, depreciation and amortization, professional
services, and payment processing fees related to the DTC
channel.
General and administrative expenses increased 71.2% to $263.7
million, or 9.2% of net sales, compared to $154.0 million, or 6.1%
of net sales during the same period last year. Included in general
and administrative expenses in 2023 is $76.5 million of costs
related to the separation and distribution from JS Global, as well
as incremental personnel-related expenses of $22.1 million, of
which $14.5 million is attributable to increased share-based
compensation.
Operating income increased 2.0% to $272.8 million, or 9.5% of
net sales, compared to $267.6 million, or 10.6% of net sales,
during the same period last year. Adjusted Operating Income
increased 29.5% to $438.1 million, or 15.7% of Adjusted Net Sales,
compared to $338.4 million, or 13.7% of Adjusted Net Sales, during
the same period last year.
Net income decreased 36.6% to $117.8 million, or 4.1% of net
sales, compared to $185.7 million, or 7.3% of net sales, during the
same period last year. Net income per diluted share decreased 36.7%
to $0.85, compared to $1.34 in the prior year period.
Adjusted Net Income increased 24.4% to $317.1 million, or 11.3%
of Adjusted Net Sales, compared to $255.0 million, or 10.3% of
Adjusted Net Sales in the prior year period. Adjusted Net Income
per diluted share increased 24.2% to $2.28, compared to $1.83 in
the prior year period.
Adjusted EBITDA increased 27.9% to $500.4 million, or 17.9% of
Adjusted Net Sales, compared to $391.2 million, or 15.8% of
Adjusted Net Sales in the prior year period.
Balance Sheet and Cash Flow Highlights
Cash and cash equivalents decreased to $170.4 million, compared
to $192.9 million as of December 31, 2022.
Inventories increased 44.4% to $792.2 million, compared to
$548.6 million as of December 31, 2022, primarily driven by demand
planning for the upcoming holiday season.
Total debt, excluding unamortized deferred financing costs, was
$810.0 million, compared to $437.5 million as of December 31, 2022.
In July 2023, we entered into a new credit facility to replace our
existing term loan and revolving credit agreement. The new credit
facility provides for a $810.0 million term loan and a $500.0
million revolving credit facility.
Special Cash Dividend
On November 8, 2023, our board of directors approved the
declaration and payment of a special cash dividend of $1.08 per
share, or approximately $150 million in the aggregate, payable on
or about December 11, 2023 to our shareholders of record as of
December 1, 2023. The dividend is expected to be funded by cash on
hand.
Fiscal 2023 Outlook
For fiscal year 2023, SharkNinja expects:
- Net sales to increase 11.5% to 12.5% and Adjusted Net Sales to
increase between 12.5% and 13.5% compared to the prior year.
- Adjusted Net Income per diluted share between $3.06 and $3.14,
reflecting a 29% to 32% increase compared to the prior year.
- Adjusted EBITDA between $690 million and $705 million,
reflecting a 33% to 36% increase compared to the prior year.
- A GAAP effective tax rate of approximately 42% to 43%,
inclusive of approximately 14 to 15 percentage points of impact
related to withholding taxes and non-deductible costs associated
with the separation and distribution from JS Global and certain
related party transactions, and approximately 3 percentage points
of impact related to withholding taxes associated with the special
cash dividend in the fourth quarter.
- Diluted weighted average shares outstanding of approximately
139.3 million.
- Capital expenditures of $120 million to $140 million primarily
to support investments in new product launches and technology.
Conference Call Details
A conference call to discuss the third quarter 2023 financial
results is scheduled for today, November 9, 2023, at 8:00 a.m.
Eastern Time. A live audio webcast of the conference call will be
available online at http://ir.sharkninja.com. Investors and
analysts interested in participating in the live call are invited
to dial 1-877-407-4018 or 1-201-689-8471. The webcast will be
archived and available for replay.
About SharkNinja, Inc.
SharkNinja, Inc. (NYSE: SN) is a global product design and
technology company, with a diversified portfolio of 5-star rated
lifestyle solutions that positively impact people’s lives in homes
around the world. Powered by two trusted, global brands, Shark and
Ninja, the company has a proven track record of bringing disruptive
innovation to market, and developing one consumer product after
another has allowed SharkNinja to enter multiple product
categories, driving significant growth and market share gains.
Headquartered in Needham, Massachusetts with more than 2,800
associates, the company’s products are sold at key retailers,
online and offline, and through distributors around the world. For
more information, please visit SharkNinja.com and follow
@SharkNinja.
Forward-looking statements
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements reflect our current views
with respect to, among other things, future events and our future
business, financial condition, results of operations and prospects
and Fiscal 2023 outlook. These statements are often, but not
always, made through the use of words or phrases such as “may,”
“should,” “could,” “predict,” “potential,” “believe,” “will likely
result,” “expect,” “continue,” “will,” “anticipate,” “seek,”
“estimate,” “intend,” “plan,” “projection,” “would” and “outlook,”
or the negative version of those words or phrases or other
comparable words or phrases of a future or forward-looking nature.
These forward-looking statements are not statements of historical
fact, and are based on current expectations, estimates and
projections about our industry as well as certain assumptions made
by management, many of which, by their nature, are inherently
uncertain and beyond our control. These forward-looking statements
are subject to a number of known and unknown risks, uncertainties
and assumptions, which you should consider and read carefully,
including but not limited to:
- our ability to maintain and strengthen our brands to generate
and maintain ongoing demand for our products;
- our ability to commercialize a continuing stream of new
products and line extensions that create demand;
- our ability to effectively manage our future growth;
- general economic conditions and the level of discretionary
consumer spending;
- our ability to expand into additional consumer markets;
- our ability to maintain product quality and product performance
at an acceptable cost;
- our ability to compete with existing and new competitors in our
markets;
- problems with, or loss of, our supply chain or suppliers, or an
inability to obtain raw materials;
- the risks associated with doing business globally;
- inflation, changes in the cost or availability of raw
materials, energy, transportation and other necessary supplies and
services;
- our ability to hire, integrate and retain highly skilled
personnel;
- our ability to maintain, protect and enhance our intellectual
property;
- our ability to securely maintain consumer and other third-party
data;
- our ability to comply with ongoing regulatory
requirements;
- the increased expenses associated with being a public
company;
- our status as a “controlled company” within the meaning of the
rules of NYSE; and
- our ability to achieve some or all of the anticipated benefits
of the separation.
This list of factors should not be construed as exhaustive and
should be read in conjunction with the other cautionary statements
that are included in this press release. We operate in a very
competitive and rapidly changing environment. New risks emerge from
time to time. It is not possible for us to predict all risks, nor
can we assess the impact of all factors on our business or the
extent to which any factor or combination of factors may cause
actual results to differ materially from those contained in any
forward-looking statements we may make. In light of these risks,
uncertainties and assumptions, the future events and trends
discussed in this press release, and our future levels of activity
and performance, may not occur and actual results could differ
materially and adversely from those described or implied in the
forward-looking statements. As a result, you should not regard any
of these forward-looking statements as a representation or warranty
by us or any other person or place undue reliance on any such
forward-looking statements. Any forward-looking statement speaks
only as of the date on which it is made, and we do not undertake
any obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future
developments or otherwise, except as required by law. In addition,
statements that contain “we believe” and similar statements reflect
our beliefs and opinions on the relevant subject. These statements
are based on information available to us as of the date of this
press release. While we believe that this information provides a
reasonable basis for these statements, this information may be
limited or incomplete. Our statements should not be read to
indicate that we have conducted an exhaustive inquiry into, or
review of, all relevant information. These statements are
inherently uncertain, and investors are cautioned not to unduly
rely on these statements. We qualify all of our forward-looking
statements by the cautionary statements contained in this press
release.
SHARKNINJA, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
and per share data)
(unaudited)
As of
September 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
170,377
$
192,890
Restricted cash
—
25,880
Accounts receivable, net
938,081
766,503
Inventories
792,195
548,588
Prepaid expenses and other current
assets
86,471
181,831
Total current assets
1,987,124
1,715,692
Property and equipment, net
149,250
137,341
Operating lease right-of-use assets
64,156
67,321
Intangible assets, net
481,754
492,709
Goodwill
833,972
840,148
Deferred tax assets, noncurrent
—
6,291
Other assets, noncurrent
48,983
35,389
Total assets
$
3,565,239
$
3,294,891
Liabilities and Shareholders’
Equity
Current liabilities:
Accounts payable
$
646,697
$
328,122
Accrued expenses and other current
liabilities
451,400
552,023
Tax payable
2,615
1,581
Current portion of long-term debt
19,127
86,972
Total current liabilities
1,119,839
968,698
Long-term debt
785,443
349,169
Operating lease liabilities,
noncurrent
62,616
61,779
Deferred tax liabilities, noncurrent
47,266
60,976
Other liabilities, noncurrent
27,730
25,980
Total liabilities
2,042,894
1,466,602
Commitments and contingencies
Shareholders’ equity:
Ordinary shares, $0.0001 par value per
share, 1,000,000,000 shares authorized and 138,982,872 shares
issued and outstanding as of September 30, 2023 and December 31,
2022
14
14
Additional paid-in capital
959,248
941,206
Retained earnings
571,174
896,738
Accumulated other comprehensive loss
(8,091
)
(9,669
)
Total shareholders’ equity
1,522,345
1,828,289
Total liabilities and shareholders’
equity
$
3,565,239
$
3,294,891
SHARKNINJA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
(in thousands, except share
and per share data)
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
Net sales(1)
$
1,070,617
$
946,897
$
2,876,211
$
2,534,720
Cost of sales
583,124
603,413
1,591,254
1,547,843
Gross profit
487,493
343,484
1,284,957
986,877
Operating expenses:
Research and development
60,691
53,968
180,430
159,955
Sales and marketing
207,599
133,137
568,035
405,319
General and administrative
124,655
47,299
263,682
154,035
Total operating expenses
392,945
234,404
1,012,147
719,309
Operating income
94,548
109,080
272,810
267,568
Interest expense, net
(13,003
)
(8,479
)
(28,523
)
(18,561
)
Other (expense) income, net
(5,865
)
2,033
(41,315
)
(8,841
)
Income before income taxes
75,680
102,634
202,972
240,166
Provision for income taxes
56,958
22,325
85,218
54,451
Net income
$
18,722
$
80,309
$
117,754
$
185,715
Net income per share, basic
$
0.13
$
0.58
$
0.85
$
1.34
Net income per share, diluted
$
0.13
$
0.58
$
0.85
$
1.34
Weighted-average number of shares used in
computing net income per share, basic
139,073,181
138,982,872
139,059,206
138,982,872
Weighted-average number of shares used in
computing net income per share, diluted
139,430,805
138,982,872
139,179,724
138,982,872
(1) Net sales in our product categories were as follows:
Three Months Ended September
30,
Nine Months Ended September
30,
($ in thousands)
2023
2022
2023
2022
Cleaning Appliances
$
449,319
$
503,388
$
1,277,986
$
1,351,576
Cooking and Beverage Appliances
339,328
260,438
939,060
696,568
Food Preparation Appliances
211,461
161,256
472,685
427,422
Other
70,509
21,815
186,480
59,154
Total net sales
$
1,070,617
$
946,897
$
2,876,211
$
2,534,720
SHARKNINJA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended September
30,
2023
2022
Cash flows from operating
activities:
Net income
$
117,754
$
185,715
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization
77,394
61,560
Share-based compensation
24,502
5,415
Provision for credit losses
2,266
1,149
Non-cash lease expense
9,688
12,318
Amortization of debt discount
694
700
Loss on extinguishment of debt
968
—
Deferred income taxes, net
3,905
(13,620
)
Loss from equity method investment
—
361
Changes in operating assets and
liabilities:
Accounts receivable
(192,209
)
137,191
Inventories
(258,982
)
(86,068
)
Prepaid expenses and other assets
65,508
(104,114
)
Accounts payable
343,603
(93,877
)
Tax payable
883
18,308
Operating lease liabilities
(9,280
)
(11,603
)
Accrued expenses and other liabilities
(90,914
)
(74,006
)
Net cash provided by operating
activities
95,780
39,429
Cash flows from investing
activities:
Purchase of property and equipment
(70,501
)
(52,872
)
Purchase of intangible asset
(6,905
)
(4,919
)
Capitalized internal-use software
development
(683
)
(4,986
)
Cash receipts on beneficial interest in
sold receivables
16,777
—
Investment in equity method investment
—
(361
)
Other investing activities, net
(3,051
)
(300
)
Net cash used in investing activities
(64,363
)
(63,438
)
SHARKNINJA, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(continued)
(in thousands)
(unaudited)
Nine Months Ended September
30,
2023
2022
Cash flows from financing
activities:
Proceeds from issuance of debt, net of
issuance cost
800,915
259,895
Repayment of debt
(437,500
)
(155,000
)
Intercompany note to Former Parent
—
(49,286
)
Distribution paid to Former Parent
(435,292
)
(45,438
)
Recharge from Former Parent for
share-based compensation
(3,165
)
(15,300
)
Net cash used in financing activities
(75,042
)
(5,129
)
Effect of exchange rates changes on
cash
(4,768
)
(11,782
)
Net decrease in cash, cash equivalents,
and restricted cash
(48,393
)
(40,920
)
Cash, cash equivalents, and restricted
cash at beginning of period
218,770
240,597
Cash, cash equivalents, and restricted
cash at end of period
$
170,377
$
199,677
Non-GAAP Financial Measures
In addition to the measures presented in our consolidated
financial statements, we regularly review other financial measures,
defined as non-GAAP financial measures by the SEC, to evaluate our
business, measure our performance, identify trends, prepare
financial forecasts, and make strategic decisions.
The key non-GAAP financial measures we consider are Adjusted Net
Sales, Adjusted Gross Profit, Adjusted Gross Margin, Adjusted
Operating Income, Adjusted Net Income, Adjusted Net Income Per
Share, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Net
Sales growth on a constant currency basis. These non-GAAP financial
measures are used by both management and our Board, together with
comparable GAAP information, in evaluating our current performance
and planning our future business activities. These non-GAAP
financial measures provide supplemental information regarding our
operating performance on a non-GAAP basis that excludes certain
gains, losses and charges of a non-cash nature or which occur
relatively infrequently and/or which management considers to be
unrelated to our core operations and excludes the financial results
from our former Japanese subsidiary, SharkNinja Co., Ltd., and our
Asia Pacific Region and Greater China distribution channels, both
of which were transferred to JS Global Lifestyle Company Limited
(“JS Global”) concurrently with the separation (the
“Divestitures”), as well as the cost of sales from (i) inventory
markups that will be eliminated as a result of the transition of
certain product procurement functions from a subsidiary of JS
Global to SharkNinja concurrently with the separation and (ii)
costs related to the transitional Sourcing Services Agreement with
JS Global that was entered into in connection with the separation
(collectively, the “Product Procurement Adjustment”). Management
believes that tracking and presenting these non-GAAP financial
measures provides management and the investment community with
valuable insight into our ongoing core operations, our ability to
generate cash and the underlying business trends that are affecting
our performance. We believe that these non-GAAP measures, when used
in conjunction with our GAAP financial information, also allow
investors to better evaluate our financial performance in
comparison to other periods and to other companies in our industry
and to better understand and interpret the results of the ongoing
business following the separation and distribution. These non-GAAP
financial measures should not be viewed as a substitute for our
financial results calculated in accordance with GAAP and you are
cautioned that other companies may define these non-GAAP financial
measures differently.
SharkNinja does not provide a reconciliation of forward-looking
Adjusted Net Income and Adjusted EBITDA to GAAP net income because
such reconciliations are not available without unreasonable
efforts. The is due to the inherent difficulty in forecasting with
reasonable certainty certain amount that are necessary for such
reconciliation, including, in particular, the realized and
unrealized foreign currency gains or losses reported within other
expense. For the same reasons, we are unable to forecast with
reasonable certainty all deductions and additions needed in order
to provide forward-looking GAAP net income at this time. The amount
of these deductions and additions may be material, and, therefore,
could result in forward-looking GAAP net income being materially
different or less than forward-looking Adjusted Net Income and
Adjusted EBITDA. See “Forward-looking statements” above.
We define Adjusted Net Sales as net sales as adjusted to exclude
certain items that we do not consider indicative of our ongoing
operating performance following the separation, including net sales
from our Divestitures. We believe that Adjusted Net Sales is an
appropriate measure of our performance because it eliminates the
impact of our Divestitures that do not relate to the ongoing
performance of our business.
The following table reconciles Adjusted Net Sales to the most
comparable GAAP measure, net sales, for the periods presented:
Three Months Ended September
30,
Nine Months Ended September
30,
($ in thousands, except %)
2023
2022
2023
2022
Net sales
$
1,070,617
$
946,897
$
2,876,211
$
2,534,720
Divested subsidiary net sales adjustment
(1)
(13,196
)
(24,003
)
(77,544
)
(65,873
)
Adjusted Net Sales(2)
$
1,057,421
$
922,894
$
2,798,667
$
2,468,847
(1)
Adjusted for net sales from SharkNinja Co., Ltd. (“SNJP”) and the
APAC distribution channels for the three and nine months ended
September 30, 2023 and 2022, as if such Divestitures occurred on
January 1, 2022.
(2)
The following tables reconcile Adjusted Net Sales to net sales per
product category, for the periods presented:
Three Months Ended September
30, 2023
Three Months Ended September
30, 2022
($ in thousands, except %)
Net sales
Divested subsidiary
adjustment
Adjusted Net Sales
Net sales
Divested subsidiary
adjustment
Adjusted Net Sales
Cleaning appliances
$
449,319
$
(6,838
)
$
442,481
$
503,388
$
(17,285
)
$
486,103
Cooking appliances
339,328
(1,190
)
338,138
260,438
(2,259
)
258,179
Food Preparation Appliances
211,461
(2,133
)
209,328
161,256
(4,459
)
156,797
Other
70,509
(3,035
)
67,474
21,815
—
21,815
Total net sales
$
1,070,617
$
(13,196
)
$
1,057,421
$
946,897
$
(24,003
)
$
922,894
Nine Months Ended September
30, 2023
Nine Months Ended September
30, 2022
($ in thousands, except %)
Net sales
Divested subsidiary
adjustment
Adjusted Net Sales
Net sales
Divested subsidiary
adjustment
Adjusted Net Sales
Cleaning appliances
$
1,277,986
$
(49,392
)
$
1,228,594
$
1,351,576
$
(50,303
)
$
1,301,273
Cooking appliances
939,060
(6,161
)
932,899
696,568
(5,895
)
690,673
Food Preparation Appliances
472,685
(8,289
)
464,396
427,422
(9,675
)
417,747
Other
186,480
(13,702
)
172,778
59,154
—
59,154
Total net sales
$
2,876,211
$
(77,544
)
$
2,798,667
$
2,534,720
$
(65,873
)
$
2,468,847
We define Adjusted Gross Profit as gross profit as adjusted to
exclude certain items that we do not consider indicative of our
ongoing operating performance following the separation, including
the net sales and cost of sales from our Divestitures and the cost
of sales from the Product Procurement Adjustment. We define
Adjusted Gross Margin as Adjusted Gross Profit divided by Adjusted
Net Sales. We believe that Adjusted Gross Profit and Adjusted Gross
Margin are appropriate measures of our operating performance
because each eliminates the impact our Divestitures and certain
other adjustments that do not relate to the ongoing performance of
our business.
The following table reconciles Adjusted Gross Profit and
Adjusted Gross Margin to the most comparable GAAP measure, gross
profit and gross margin, respectively, for the periods
presented:
Three Months Ended September
30,
Nine Months Ended September
30,
($ in thousands, except %)
2023
2022
2023
2022
Net sales
$
1,070,617
$
946,897
$
2,876,211
$
2,534,720
Cost of sales
(583,124
)
(603,413
)
(1,591,254
)
(1,547,843
)
Gross profit
487,493
343,484
1,284,957
986,877
Gross margin %
45.5
%
36.3
%
44.7
%
38.9
%
Divested subsidiary net sales adjustment
(1)
(13,196
)
(24,003
)
(77,544
)
(65,873
)
Divested subsidiary cost of sales
adjustment(2)
7,628
15,387
45,116
41,323
Product Procurement Adjustment(3)
23,574
18,341
53,369
51,231
Adjusted Gross Profit
$
505,499
$
353,209
$
1,305,898
$
1,013,558
Adjusted Net Sales
$
1,057,421
$
922,894
$
2,798,667
$
2,468,847
Adjusted Gross Margin
47.8
%
38.3
%
46.7
%
41.1
%
(1)
Adjusted for net sales from SNJP and the APAC distribution channels
for the three and nine months ended September 30, 2023 and 2022, as
if such Divestitures occurred on January 1, 2022.
(2)
Adjusted for cost of sales from SNJP and the APAC distribution
channels for the three and nine months ended September 30, 2023 and
2022, as if such Divestitures occurred on January 1, 2022.
(3)
Represents cost of sales incurred related to the Product
Procurement Adjustment. As a result of the separation, we purchase
100% of our inventory from one of our subsidiaries, SNHK, and no
longer purchase inventory from a purchasing office wholly owned by
JS Global. Thus, the markup on all inventory purchased subsequent
to the separation will be completely eliminated in consolidation.
As a result of the separation, we pay JS Global a sourcing service
fee to provide value-added sourcing services on a transitional
basis under a Sourcing Services Agreement.
We define Adjusted Operating Income as operating income
excluding (i) share-based compensation, (ii) certain litigation
costs, (iii) amortization of certain acquired intangible assets,
(iv) certain separation and distribution costs and (v) certain
items that we do not consider indicative of our ongoing operating
performance following the separation, including operating income
from our Divestitures and cost of sales from our Product
Procurement Adjustment.
The following table reconciles Adjusted Operating Income to the
most comparable GAAP measure, operating income, for the periods
presented:
Three Months Ended September
30,
Nine Months Ended September
30,
($ in thousands)
2023
2022
2023
2022
Operating income
$
94,548
$
109,080
$
272,810
$
267,568
Share-based compensation(1)
21,337
969
24,502
5,415
Litigation costs(2)
3,965
19
4,600
4,024
Amortization of acquired intangible
assets(3)
4,897
4,897
14,690
14,691
Separation and distribution related
costs(4)
41,455
275
76,549
275
Product Procurement Adjustment(5)
23,574
18,341
53,369
51,231
Divested subsidiary operating income
adjustment(6)
287
(1,668
)
(8,456
)
(4,811
)
Adjusted Operating Income
$
190,063
$
131,913
$
438,064
$
338,393
(1)
Represents non-cash expense related to restricted stock unit awards
issued from the JS Global and SharkNinja equity incentive plans.
(2)
Represents litigation costs incurred for certain patent
infringement claims and false advertising claims against us.
(3)
Represents amortization of acquired intangible assets that we do
not consider normal recurring operating expenses, as the intangible
assets relate to JS Global’s acquisition of our business. We
exclude amortization charges for these acquisition-related
intangible assets for purposes of calculating Adjusted Net Income,
although revenue is generated, in part, by these intangible assets,
to eliminate the impact of these non-cash charges that are
significantly impacted by the timing and valuation of JS Global’s
acquisition of our business, as well as the inherent subjective
nature of purchase price allocations.
(4)
Represents certain costs incurred related to the separation and
distribution from JS Global.
(5)
Represents cost of sales incurred related to the Product
Procurement Adjustment. As a result of the separation, we purchase
100% of our inventory from one of our subsidiaries, SNHK, and no
longer purchase inventory from a purchasing office wholly owned by
JS Global. Thus, the markup on all inventory purchased subsequent
to the separation will be completely eliminated in consolidation.
As a result of the separation, we pay JS Global a sourcing service
fee to provide value-added sourcing services on a transitional
basis under a Sourcing Services Agreement.
(6)
Adjusted for operating income from SNJP and the APAC distribution
channels for the three and nine months ended September 30, 2023 and
2022, as if such Divestitures occurred on January 1, 2022.
We define Adjusted Net Income as net income excluding (i)
share-based compensation, (ii) certain litigation costs, (iii)
foreign currency gains and losses, net (iv) amortization of certain
acquired intangible assets, (v) certain separation and distribution
costs, (vi) certain items that we do not consider indicative of our
ongoing operating performance following the separation, including
net income from our Divestitures and cost of sales from our Product
Procurement Adjustment, (vii) the tax impact of the adjusted items
and (viii) certain withholding taxes.
Adjusted Net Income Per Share is defined as Adjusted Net Income
divided by the diluted weighted average number of ordinary
shares.
The following table reconciles Adjusted Net Income and Adjusted
Net Income Per Share to the most comparable GAAP measures, net
income and net income per share, diluted, respectively, for the
periods presented:
Three Months Ended September
30,
Nine Months Ended September
30,
($ in thousands, except share and per
share amounts)
2023
2022
2023
2022
Net income
$
18,722
$
80,309
$
117,754
$
185,715
Share-based compensation(1)
21,337
969
24,502
5,415
Litigation costs(2)
3,965
19
4,600
4,024
Foreign currency losses (gains),
net(3)
3,862
(839
)
43,479
11,783
Amortization of acquired intangible
assets(4)
4,897
4,897
14,690
14,691
Separation and distribution related
costs(5)
41,455
275
76,549
275
Product Procurement Adjustment(6)
23,574
18,341
53,369
51,231
Tax impact of adjusting items(7)
(4,704
)
(5,206
)
(30,686
)
(19,232
)
Tax withholding adjustment (8)
19,474
—
19,474
—
Divested subsidiary net income
adjustment(9)
394
479
(6,586
)
1,055
Adjusted Net Income
$
132,976
$
99,244
$
317,145
$
254,957
Net income per share, diluted
$
0.13
$
0.58
$
0.85
$
1.34
Adjusted Net Income Per Share
$
0.95
$
0.71
$
2.28
$
1.83
Diluted weighted-average number of shares
used in computing net income per share and Adjusted Net Income Per
Share(9)
139,430,805
138,982,872
139,179,724
138,982,872
(1)
Represents non-cash expense related to restricted stock unit awards
issued from the JS Global and SharkNinja equity incentive plans.
(2)
Represents litigation costs incurred for certain patent
infringement claims and false advertising claims against us.
(3)
Represents foreign currency transaction gains and losses recognized
from the remeasurement of transactions that were not denominated in
the local functional currency, including gains and losses related
to foreign currency derivatives not designated as hedging
instruments. The total net gain (loss) recognized on our derivative
instruments related to forward contracts outstanding not designated
as hedging instruments included in the total of foreign currency
losses, net, was $0.7 million and $9.2 million for the three months
ended September 30, 2023 and 2022, respectively, and $(31.6)
million and $12.8 million for the nine months ended September 30,
2023 and 2022, respectively.
(4)
Represents amortization of acquired intangible assets that we do
not consider normal recurring operating expenses, as the intangible
assets relate to JS Global’s acquisition of our business. We
exclude amortization charges for these acquisition-related
intangible assets for purposes of calculated Adjusted Net Income,
although revenue is generated, in part, by these intangible assets,
to eliminate the impact of these non-cash charges that are
significantly impacted by the timing and valuation of JS Global’s
acquisition of our business, as well as the inherent subjective
nature of purchase price allocations.
(5)
Represents certain costs incurred related to the separation and
distribution from JS Global.
(6)
Represents cost of sales incurred related to the Product
Procurement Adjustment. As a result of the separation, we purchase
100% of our inventory from one of our subsidiaries, SNHK, and no
longer purchase inventory from a purchasing office wholly owned by
JS Global. Thus, the markup on all inventory purchased subsequent
to the separation will be completely eliminated in consolidation.
As a result of the separation, we pay JS Global a sourcing service
fee to provide value-added sourcing services on a transitional
basis under a Sourcing Services Agreement.
(7)
Represents the income tax effects of the adjustments included in
the reconciliation of net income to Adjusted Net Income determined
using the tax rate of 22.0%, which approximates our effective tax
rate, excluding (i) the withholding adjustment described in
footnote (8), (ii) divested subsidiary net income adjustment
described in footnote (9), and (iii) certain share-based
compensation costs and separation and distribution-related costs
that are not tax deductible.
(8)
Represents withholding taxes associated with the cash dividend paid
to JS Global in connection with the separation and related
refinancing.
(9)
Adjusted for net income (loss) from SNJP and the APAC distribution
channels for the three and nine months ended September 30, 2023 and
2022, as if such Divestitures occurred on January 1, 2022.
(10)
In calculating net income per share and Adjusted Net Income Per
Share, we used the number of shares transferred in the separation
and distribution for the denominator for all periods prior to
completion of the separation and distribution on July 31, 2023.
We define EBITDA as net income excluding: (i) interest expense,
net, (ii) provision for income taxes and (iii) depreciation and
amortization. We define Adjusted EBITDA as EBITDA excluding (i)
share-based compensation cost, (ii) certain litigation costs, (iii)
foreign currency gains and losses, net, (iv) certain separation and
distribution costs and (v) certain items that we do not consider
indicative of our ongoing operating performance following the
separation, including Adjusted EBITDA from our Divestitures and
cost of sales from our Product Procurement Adjustment. We define
Adjusted EBITDA Margin as Adjusted EBITDA divided by Adjusted Net
Sales. We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA
Margin are appropriate measures because they facilitate a
comparison of our operating performance on a consistent basis from
period to period that, when viewed in combination with our results
according to GAAP, we believe provide a more complete understanding
of the factors and trends affecting our business than GAAP measures
alone.
The following table reconciles EBITDA, Adjusted EBITDA and
Adjusted EBITDA Margin to the most comparable GAAP measure, net
income, for the periods presented:
Three Months Ended September
30,
Nine Months Ended September
30,
($ in thousands, except %)
2023
2022
2023
2022
Net income
$
18,722
$
80,309
$
117,754
$
185,715
Interest expense, net
13,003
8,479
28,523
18,561
Provision for income taxes
56,958
22,325
85,218
54,451
Depreciation and amortization
25,602
21,395
77,394
61,560
EBITDA
114,285
132,508
308,889
320,287
Share-based compensation(1)
21,337
969
24,502
5,415
Litigation costs(2)
3,965
19
4,600
4,024
Foreign currency losses (gains),
net(3)
3,862
(839
)
43,479
11,783
Separation and distribution related
costs(4)
41,455
275
76,549
275
Product Procurement Adjustment(5)
23,574
18,341
53,369
51,231
Divested subsidiary Adjusted EBITDA
adjustment(6)
264
(459
)
(11,020
)
(1,800
)
Adjusted EBITDA
$
208,742
$
150,814
$
500,368
$
391,215
Adjusted Net Sales
$
1,057,421
$
922,894
$
2,798,667
$
2,468,847
Adjusted EBITDA Margin
19.7
%
16.3
%
17.9
%
15.8
%
(1)
Represents non-cash expense related to restricted stock unit awards
issued from the JS Global and SharkNinja equity incentive plans.
(2)
Represents litigation costs incurred for certain patent
infringement claims and false advertising claims against us.
(3)
Represents foreign currency transaction gains and losses recognized
from the remeasurement of transactions that were not denominated in
the local functional currency, including gains and losses related
to foreign currency derivatives not designated as hedging
instruments. The total net gain (loss) recognized on our derivative
instruments related to forward contracts outstanding not designated
as hedging instruments included in the total of foreign currency
gains (losses), net, was $0.7 million and $9.2 million for the
three months ended September 30, 2023 and 2022, respectively, and
$(31.6) million and $12.8 million for the nine months ended
September 30, 2023 and 2022, respectively.
(4)
Represents certain costs incurred related to the separation and
distribution from JS Global.
(5)
Represents cost of sales incurred related to the Product
Procurement Adjustment. As a result of the separation, we purchase
100% of our inventory from one of our subsidiaries, SNHK, and no
longer purchase inventory from a purchasing office wholly owned by
JS Global. Thus, the markup on all inventory purchased subsequent
to the separation will be completely eliminated in consolidation.
As a result of the separation, we pay JS Global a sourcing service
fee to provide value-added sourcing services on a transitional
basis under a Sourcing Services Agreement.
(6)
Adjusted for Adjusted EBITDA from SNJP and the APAC distribution
channels for the three and nine months ended September 30, 2023 and
2022, as if such Divestitures occurred on January 1, 2022. The
divested subsidiary Adjusted EBITDA adjustment represents net
(loss) income from our Divestitures excluding interest expense,
income tax expense, depreciation and amortization expense and
foreign currency gains and losses recorded at the subsidiary level.
We refer to growth rates in Adjusted Net Sales on a constant
currency basis so that results can be viewed without the impact of
fluctuations in foreign currency exchange rates. These amounts are
calculated by translating current year results at prior year
average exchange rates. We believe elimination of the foreign
currency translation impact provides useful information in
understanding and evaluating trends in our operating results.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109107622/en/
Investor Relations: Arvind Bhatia, CFA VP, Investor Relations
IR@sharkninja.com Anna Kate Heller ICR SharkNinja@icrinc.com Media
Relations: Sarah McKinney VP, Corporate Communications
PR@sharkninja.com
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